Economist behind Uber study admits error, adjusts numbers | Hacker News Reader

Economist behind Uber study admits error, adjusts numbers

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245 pointsresalisbury158 comments

Alex Tabarrok pointed to the well done study, that of course never got anywhere near this level of attention: https://twitter.com/ATabarrok/status/969651065695227904

"Dubious. Cited paper uses self-reported data from 1100 drivers. Cook et al. use exactly measured data on 1.8 million drivers and calculate average wage after expenses of $13 per hour. https://web.stanford.edu/~diamondr/UberPayGap.pdf "

It definitely does not look like you describe.

The original article is self-reported income, which i agree is crap and proof that it can be interpreted any way one wants, as is show in this thread: this is clearly PR damage-control from uber.

The one you linked is the other end of the spectrum. It is a math formula on values provided by uber and completely ignores the associated costs with the profession. It does not account for down time, it does not account for insurance, car depreciation etc. The $13 is just more meaningless data because all it measured in the paper is "income from uber, taking into account avg on-meter time with pool+surge pricing variations". (they do include the costs, but as "The primary costs drivers face are fuel, maintenance, depreciation, and fines for parking or moving violations. Zoepf et al. (2017) estimate median driver’s expenses are 32 cents per mile." which is very far from actual data)

IMHO both are utter garbage.

The Stanford paper estimates gross earning to be around $18 per hour and all expenses including insurance, downtime, gasoline and depreciation (but not fines) at $5 per hour. This gives net earnings of $13 per hour.

To get the $5 per hour in expenses they use 25 cents per mile for those expenses and 20 miles driven per hour.

This is all explained on page 36 of the Standford paper which I think is excellent but is primarily concerned with understanding the gender earnings gap not the distribution of net earnings.

The IRS mileage rate is $0.545 per mile, and is supposed to be a realistic average for car expenses.

Edit: per mile, not per hour. Oops! fixed the rate, too

$0.56 per mile not hour! (Though I see $0.545 per mile [1].)

[1] https://www.irs.gov/newsroom/standard-mileage-rates-for-2018...

It's supposedly more or less an average across car types and includes a percentage of fixed costs however. It's almost certainly high for a driver who would own a car anyway and has an economical vehicle that optimizes for Uber driving. It's going to be a range depending on the driver though 25 cents per mile (all miles, not just those with a passenger) is probably near the bottom end.

If I was an Uber driver, that's the rate I'd use for tax accounting purposes.

That's for any car though. Most Uber drivers are driving Priuses or similar and therefore have much lower costs.

The study would do well to use such a figure, as it is objective and sets a reasonable upper bound on the costs.

Why is it better to use a upper bound rather than a more realistic estimate?

Because it is 1) conservative and 2) a "realistic" figure has unknown variance.

Are you arguing that 32 cents per mile is too low a cost? It's lower than IRS reimbursement rules but it's pretty consistent with a calculation of depreciation/maintenance plus gas for a reasonably economical car, especially given that some costs like excise tax are indeed pretty much fixed. So long as those costs are also applied to miles driven when "on the clock" but driving to pick up a passenger (i.e. not being paid), it seems like a very reasonable ballpark number.

You seem to directly contradict yourself. It doesn’t “completely ignores the associated costs” if they are deducting 32 cents a mile?

"...which is very far from actual data"

The study used a measure the poster did not think was accurate.

...which contradicts "completely ignores the associated costs" (emphasis theirs). Hell, the poster even said "ignores depreciation" in one sentence and says how the number includes depreciation in another sentence.

There's really no defending that paragraph.

> does not account for down time, it does not account for insurance, car depreciation etc

Most jobs have those costs. You need a car to get to work; you pay for gas, insurance, tolls, etc. Time is wasted during transit/commute.

Are drivers special in this respect?

Yes, insurance rates for ride share cars is higher because it's a commercial vehicle. And yes, most people commute an hour or 2 each day, not rack up hundreds of miles for 8+ hours a day. So yeah, the cost is not comparable.

> Yes, insurance rates for ride share cars is higher because it's a commercial vehicle.

Do Uber/Lyft drivers typically make their activities known to their insurance companies?

> Do Uber/Lyft drivers typically make their activities known to their insurance companies?

Maybe not, but if they do there is substantial legal risk (not just for accident liability—for which they will be uninsured—but also for the legal consequences of driving without legally mandated insurance coverage.)

From a sample of 10, 8 were using private insurance and planning to lie in the event of an accident.

I have no way to know if this is at all represebtative. Moat expressed the rates were so high as to prevent any but full time drivers (40+ hours/week) from profiting with it.

I am certian Uber knows, as they choose not to verify this.

State Farm had a warning in their recent mailer for policy renewals that you are not covered under your auto policy for any ridesharing activities, although you could purchase a rider to insure you at additional cost.

Also, if you say 12 or 24 thousand miles a year and get into an accident with widely unexpected mileage on your car, they will suspect something is amiss and likely investigate.

State Farm also obtains your mileage data from "third party providers".

https://splinternews.com/how-car-insurance-companies-spy-on-...

If they want cover in the event of an accident they do.

I assume they mean the extra costs in those areas due to driving, for example, driving for Uber will cause you to use your car much more, which can wear your car down faster.

No you don't. I have never used a car to get to work. Most people I know do not drive to work.

Reasonable conclusions that don't stretch evidence get less attention

Thanks for the link! But I think you have an extra double quote at the end

Sorry, I was quoting his tweet in its entirety, which made the link unclickable.

Do any of the naysayers ever actually talk to their uber/lyft drivers? I've never met a single one with bad things to say about the job. Most seem to enjoy the social aspect, and many foreigners take it as an opportunity to practice English while making some spare cash.

Who are you people to presume that these rational agents need to be restricted from earning money in a way that they deem convenient? Especially when their work is at will and unforced? Do you really feel that there is some kind of net good to the loss of work that comes with forcing uber to pay minimum wage, when it means that many content drivers will lose work?

Have you considered the incentives that they have when talking to a paying customer? Particularly one that is going to rate them based on the interaction?

Of course they "love their job"; they want to create a positive experience in the mind of someone who has a lot of power over them.

What I'm saying is that your anecdata has an observer effect that you are strongly discounting.

Also: most waiters think your jokes are funny, and every stripper thinks you're very handsom.

Article from 2014 about how Uber drivers can't be honest, to protect their jobs: https://www.jacobinmag.com/2014/09/against-sharing/

I don't think that's really valid here - you're asking them for an opinion of their job, not their opinion of you. What they think of their job has nothing to do with how I'll rate them. Heck, I may rate them higher or tip them better if I feel sorry for them not making much money.

Yes, but they don't necessarily know how you specifically will act. It's better to just assume that having a positive and happy discussion is better.

Have you considered that the fact that they keep driving is a strong indicator that they think it's the best possible way they can spend their time?

Two can play this game :)

Have you considered it might the best possible way to spend their time because they have hardships finding another job?

Of course!

I think most of us go to our current jobs only because we have a hard time finding a better one!

So, it wouldn't be too crazy to think then that those hardships finding another job would influence what they tell a customer asking them about whether or not they like their current job?

Now you're asking something else than what was originally asked.

They might say good things about their job because of the incentives to be positive and fear or losing the job. That's one argument that can be made, which I think is probably at least somewhat true: they might not like their job, but they won't admit it.

What you're saying now is something else (if I understood correctly) - you're saying they only think good things about their job, because they can't get another job. That's a totally different thing! That argument is: they like their job, but for specific reasons. An argument I find a lot less compelling (because it's always true!).

If I collected the same anecdata with Uber drivers I know in real life, not in the context of an uber ride, would the observer effect still apply?

Yes, lots of people brag about their jobs, life, see Facebook.

Then you're subject to sample bias.

What incentives? A 4 instead of 5 star rating, and maybe a $1-5 tip? For answering a question honestly?

I think your incentives are overstated. Excluding some kind of egregious slight, riders have very little influence over drivers.

That is not overstated. The rating has a significant impact on their livelihood. In addition, tips are 100% profit. I'm sure $5 is chump change to you, but a $5 tip an hour would be 60% pay increase.

Well, there's no way for us to prove either side, but I suspect that $5 tips are rare, and given the enthusiasm of many of my drivers, I don't expect that many of them would feel the need to lie on the off chance that they might get a nice tip.

Also, consider that sob stories confer tips too. Why not convince your customer that uber is abusing you, but you have nowhere else to go?

I suppose we are just arguing over anecdote; however, my point is that the simple preponderance of drivers is evidence that by and large they are indeed satisfied, as they report to me when I ask.

> Also, consider that sob stories confer tips too. Why not convince your customer that uber is abusing you, but you have nowhere else to go?

Not in the context of providing a professional service, it doesn't. When was the last time you tipped a waiter or waitress more for a sob story? People want to be catered to when they're paying for a service, and part of that is not having to worry about other people's negative emotions.

Why do you think $5 tips are rare? 20% rounded up to the nearest dollar is my usual practice, and I don’t think of myself as someone who throws money around.

That is crazy to me. 15% is for good service, 20% might be for exceptional service. It's already a percent, no need to adjust for inflation.

I love seeing college kids tip 25% at food trucks with their clover iPad or square terminal. First of all, there is no waiter or service, and secondly, the options presented are 18%, 20%, and 25% or something equally stupid. I'm always fascinated that these kids with no income have no problem hitting the 25% button...for nothing.

College kids know what it's like to be broke, and on average, feel that food-service workers don't make enough money.

It's like the studies that show that poor people give a greater share of their income to charity.

I'm a 10% for bad service, 20% for not bad service kind of guy. It honestly takes all of my internal effort not to tip 20% for bad service.

> ...for nothing.

...for to pay someone who is working for them. The indirection of wage labor isn't enough of an excuse for me to not attempt to make sure the person who is working for me is compensated to my standard.

Then you're letting employers take advantage of you. The whole tip system is a scam in the first place. It should be a business's responsibility to price appropriately.

A 25% tip is crazy. Our machine shows 15%, 20%, and "other", and I'd say we average something like 10% in tips any given day. Considering the level of service one gets from a food truck, that feels pretty fair to me.

This is a good rule for interacting with tipped US workers in general: be generous, and tip in cash. Tips are a way for companies to save money by avoiding taxes, and a way for workers to be paid without their employers taking a cut. If you think Uber is paying your driver less than minimum wage, make up the difference in cash. Also, "internet points" in the form of stars cost you nothing, so give your driver five stars unless he was completely incompetent.

Luckily I live in a country where I don't have to ensure the survival of my taxi driver or waiter by giving them a tip.

They get paid decently from the start.

Drivers get booted off the Uber platform when their ratings go too low, so riders have plenty of power. https://www.thedailybeast.com/the-mysterious-way-uber-bans-d...

"For a Harvard student, the median grade is an A- and for an Uber driver, anything below a 4.7 out of 5 average rating from passengers spells trouble. Or, as one driver memorably puts it on Uber People, a popular web forum for rideshare drivers: “4.6 is [a] death zone.”"

As for finding out what Uber drivers actually think, you can google "uber driver forum." A unionization vote was called in one of those forums, and something like 96% of the drivers voted yes. Not a sign that they're happy with their lot, not at all.

When I used to ride Uber/Lyft more I talked to a ton of drivers who had bad things to say about ridesharing, about how it's a race to the bottom, about how the taxi days paid more, about how the hours are grueling and they weren't fit, etc. I think it just depends on your sample. Luckily, studies explicitly try to find unbiased samples.

I always do and I've heard enough complaints about Uber from them that I've switched entirely to Lyft or Juno (local to NYC) which they much prefer and make more money from. They also frequently complain that they used to be able to live well off the driving but it keeps getting harder to stay afloat and they're not sure what they're going to do.

One guy that particularly stuck out had been an engineer at GE working on modifying helicopter engines for desert conditions for the US military (they ultimately made tolerances bigger and it fixed the sand problems counter intuitively). He then had a failed start-up and was driving because he couldn't find any work because of the gap in his CV (as he told it). Said he hated driving and it didn't pay the bills but he didn't know what else to do.

We all have plenty of anecdotal evidence. But maybe things are different in NYC than out west.

So Uber was the only company willing to hire that guy when everyone else rejected him, and somehow that's a blow against Uber?

Hire him? Not hardly. If they did that they'd have to pay minimum wage and cover FICA.

"Hire a contractor" is a common phrase in English, even federal agencies use it: https://www.consumer.ftc.gov/articles/0242-hiring-contractor

The point is that uber isn't economically sustainable for the driver

So you think it's better if Uber wasn't there and he couldn't make any money at all?

You get a bit of selection bias.

The issues with ridesharing remove people from the pool of drivers.

The two most common ones are 1) Accident without commercial vehicle insurance, 2) a breakdown without savings to repair or purchase a new car

My waitress is always so friendly with me when I eat out too. Nothing but good feelings all around.

I understand what you're saying, except a waitress runs the risk of losing her job for badmouthing the establishment.

An uber driver who answers me honestly when I ask how he likes the work runs the risk of a single less than 5 star rating, and no other consequences. That's part of the casual appeal of uber/lyft to a driver, I imagine.

What if you work for Uber, secretly. Just the sort of initiative Uber might undertake and I'm not exactly knocking this specific instance. Definitely an incentive not to answer in any method other than gushing love and gratitude.

All the time, and I get plenty of negative responses.

But what I think is far more damning is the median driver’s tenure. I can’t recall a driver in years that had been driving for more than six months, and even finding someone who’s hit three months is rare (in SF).

It's not like it's a desirable occupation. It's unskilled work. What you see is people using it as a temporary way to make money between other jobs. Not sure why that's damning.

Taxi-driving is a full-time job with tons of people who've been doing it for years. Is taxi-driving a desirable occupation for skilled workers? Lyft and Uber aren't keeping drivers for a straightforward reason: they're a comparably worse value proposition than being a taxi driver used to be.

I'm not saying there aren't advantages to the new system. There certainly are. But the drivers are bearing the brunt of the downsides.

Right, drivers no longer have the barriers to entry that prevent competition. The ones that don't bear the brunt are new drivers.

I have spoken many drivers in Toronto and most say that it might make more sense for them to work at a fast food place.

Why don't they?

Whatever anyone says during a business transaction can be thrown right in the trash, it's useless. I don't even earn tips and I know enough not to complain about my job to clients. When speaking to clients and customers you're going to try to be positive, doubly so for customer service.

Either way, everyone I know who drives for Uber is very financially illiterate and believes gas in their only expense. So the amount of money that they think they are earning might not match reality - that's the case with the people I personally know at least.

Yes, many have to me.

$8.55 is the profit but it is compared to minimum wage. Minimum wage is not profit as there are costs associated with getting to work (bus/car) and mandatory taxes.

Shouldn’t the $8.55 be compared with net income from minimum wage? This seems like a meaningful comparison for people choosing to drive or work minimum wage.

This is a very good point; if you drive your car to work then you pay gas and depreciation just like an Uber driver, except you don't get to tax-deduct it.

Definitely, but "I commute to/from work" is a lot different than "I drive for 10 hours a day, every day".

It’s certainly different, but I think it should be in the comparison.

I drive 10 hours a week, not per day. But there’s a cost. To say “you make $10/hour” and an Uber driver makes $8.55 after expenses and taxes is not very useful because the Uber driver has more cash in pocket.

I think this is useful for an academic paper to compare apples to oranges. And the author directly compared this to minimum wage which seems like an amateur mistake for a researcher from MIT. Unless they have a policy angle they are promoting and are not a fair broker of info.

Agreed - if it was an apples-to-apples comparison we wouldn't need an academic paper.

You also pay self employment taxes. W2 and 1099 income aren't directly comparable. Oh, and health insurance as a contractor is WAY higher than as an employee. That has to eat into their wages a lot.

Downvote mysteries again. What of my comment isn't accurate?

Edit: Lol. Downvote on this one too with no reply.

"You're wrong and here's why" adds value for everyone. "You're wrong" is close to useless.

You didn't say "You're wrong," you started mentioning other things which might be significant expenses also. I personally upvoted because I was giving the benefit of the doubt. In the response, you proved me wrong; you were mentioning other things not because you thought they were comparable, but as a way to discount the thing you were replying to. You weren't actually interested in whether the costs you mentioned were comparable to the cost of a commute, you just wanted to silence the comparison for some reason.

I'm assuming it was based on the law of averages, aka there's some things here and some things there, it probably all washes out in the end, but I think it's better to actually add everything up than to assume. Useful?

Yes, thanks, though I was equating the unexplained anonymous downvotes as “you’re (I’m) wrong”...not my comment. Just adding some common misses when people equate 1099 rates with w2. I wasn’t arguing your comment, just embellishing. I rarely assume parent is downvoting, I don’t think HN allows that.

Writing off depreciation + having to pay self-employment tax is probably a wash I would think, not sure though.

Uber drivers often have to "drive to work" too, from the suburbs or country into the city. One driver I talked with lived 90 minutes away from the city, and usually couldn't find a passenger going that direction during her 'commute.'

I don't think this study accounts for this commute-time, unless I'm misreading.

It's too late. Corrections don't really work in the social media age, two different interpretations of the same base facts won't propagate through the same path. I don't know whether the adjustments are valid or invalid, but $3.37 will be an incontrovertible fact for an influential swath of people for a long time.

Kind of makes me think of the divide in opinion on modern wage inequality. I'm still not sure whether to think it's purely because of women not being in as well paying positions or whether discrimination within the same job is a significant player, because I see conflicting reports.

I find very basic sniff tests tend to score relatively well at figuring out the truth on 'controversial' issues. So for instance this $3/hour earnings just did not make sense as there would rapidly approaching 0 drivers of > 'x months' experience driving for Uber, whereas drivers that have been doing it for years are hardly unicorns.

For the wage gap take as an assumption that companies were genuinely able to pay women less for doing the exact same quality and quantity of work as men. Well what would happen? We already live in a world where big companies relentlessly squeeze every penny they can from minimizing labor costs. The notion that people are intentionally paying more to men just to be around more men defies belief, to put it mildly.

And there's a corollary to this as well. As 'wage gap' entered the zeitgeist, there's no doubt that some companies, ever anxious to provide a bump to their next quarterly, did actively look to see if they could replace their male workers with females to save on labor costs. And the results of their research, in that no companies seem to be doing this, speaks for itself.

Controversial issues are controversial precisely because there's no "basic sniff test" that fits all the data. If you find you come to an easy conclusion on a controversial issue, you might not have all the information others do. To take your wage gap example, your explanation only works in the case where hiring managers know men and women are equally qualified, but choose to pay women less because they can get away with it. That's almost certainly not what's going on.

You're describing complex issues, not controversial. Controversial issues tend to be controversial because people assume a conclusion, and then defend that to the death - facts be damned. When a sufficient number of people on either side of a topic engage in this behavior, suddenly we have a controversial issue.

So for instance on this case, I agree with you. I've no doubt women get paid less than men on average. And tall men get paid more than short men. And fat men get paid less than non-fat men. And I suspect that if we broke it down into hair color, you'd also find discrepancies there. Differences do not mean discrimination.

A problem would be if companies were unlawfully actively discriminating against people. As you yourself said, that is almost certainly not what's going on.

Disagreeing with you again. Controversy doesn't happen just because people ignore facts. It happens when the facts don't lead to an obvious conclusion, or when there aren't enough facts to go on, so intelligent people can reach different conclusions. When the only people on one side of a debate are obviously stupid or self-serving, we don't call it a controversy. We call it nonsense and make YouTube videos mocking it. (see also, Flat Earth)

> A problem would be if companies were unlawfully actively discriminating

It's a problem that companies discriminate, period, whether they're doing it intentionally or not. Overlooking skilled short people to hire and promote tall people means they're working against their own best interest and against society's interest, at the same time. (That doesn't mean I'm advocating for any particular solution, or that I think height should be a protected class. I'm just saying it is in fact a problem.)

Now you're getting into a touchier issue and making a very large assumption, I suspect without even realizing it. By suggesting that there is a problem you're indicating a belief that you believe all people are roughly identical. As I imagine you may be doing, let's avoid touchier issues and talk about height -- my examples were not off the cuff.

It's extremely difficult to try to objectively measure the competence of an individual in general, but IQ does tend to provide a workable measurement that does tend to be quite predictive and map well to aggregate performance in 'mental' fields. But we're talking about height, so why am I bringing this up? As counter intuitive as it is, height correlates strongly with IQ. We could discuss the possible reasons for this (environmental? sexual selection? shared genetic markers? something else?) but the point is that this is not disputed. Here [1][2] are a couple of sources if you were not aware of this. You can find countless more on google scholar searching for 'height iq correlation'.

But this raises the issue that not only do tall people earn more than short people, but that it's highly likely that companies paying more to tall people are indeed working in their, and society's, best interest. The long and short here is that you cannot assume differences are a result of irrational decisions.

So you're left to try to argue that short people bring something to table that's valuable but less visible than their individual competence (at least in so much as IQ is reflective of that). This could be true, but I think that there's scant evidence for such. The first issue you'd need to overcome is the existential case. And I find the way most people try to do this is by getting back to assuming discrimination, yet now you're stuck in circular logic or having to assume your conclusion. 'All people are equal. What about these vast quantities of data showing substantial differences from ostensibly objective assessments? It's caused by environmental issues and discrimination. Why do you think that? Well because it doesn't show all people being equal!'

And to be clear, everything I'm saying above applies to people considered as groups - not individuals. Einstein, for instance, was about 5'7". It just means there are different distributions among different groups, and so when you consider these groups as a whole you'd expect to see these different distributions reflected.

[1] - http://journals.plos.org/plosgenetics/article?id=10.1371/jou...

[2] - https://www.sciencedirect.com/science/article/pii/S105381191...

> So for instance this $3/hour earnings just did not make sense as there would rapidly approaching 0 drivers of > 'x months' experience driving for Uber, whereas drivers that have been doing it for years are hardly unicorns.

There is a lot of room for drivers to optimize their driving so that they end up making more than average by choosing times and locations to drive that will get them a larger portion of their time giving rides, rides at a higher speed, rides with higher surge multipliers, etc. The more experienced drivers could be making significantly more than the average amount, while less experienced drivers who haven't learned these tricks yet are earning less.

> For the wage gap take as an assumption that companies were genuinely able to pay women less for doing the exact same quality and quantity of work as men. Well what would happen? We already live in a world where big companies relentlessly squeeze every penny they can from minimizing labor costs. The notion that people are intentionally paying more to men just to be around more men defies belief, to put it mildly.

There are multiple problems with this sniff test. First, it makes the same fallacy as the economist who sees a twenty dollar bill on the ground and then says that there couldn't really be a twenty dollar bill on the ground because someone would already have picked it up. Markets are not perfectly efficient and any conclusion based on that assumption is nonsense.

Second, the companies aren't choosing to pay men more just because they are men. They are paying them more because men have higher existing wages which gives them more bargaining power. It is irrational on an overall basis but it is rational on an individual basis, so no individual company has an incentive to change.

From what I understand if you incorporate experience, job position, hours worked, there is still an 8% or so gender wage gap that isn't explainable or doens't have a measurable explanation. I only know this from looking up [1] and [2] recently, which both link to studies and similar that I perused instead of the commentary.

[1]https://www.reddit.com/r/badeconomics/comments/79zxz8/q_why_... [2]https://www.reddit.com/r/badeconomics/comments/5v0o0i/lots_o...

That actually is what I found really interesting about the original Uber report. It was within the range of these studies that accounted for as many variables as possible.

You're right that it's too late but a correction will matter to individuals. Drivers knew this study was BS and the correction will help them convince their friends who would be a good fit to drive for Uber that it was, indeed, BS.

Corrections have never worked.

30y ago news was on the frontpage, corrections on page 4 in small print at the bottom.

I feel somewhat vindicated now:

https://news.ycombinator.com/item?id=16503558

Sometimes we are too quick to agree with things that reinforce our beliefs. In this case that ride service platforms are squeezing out the last penny from their captive servants.

Do, hats off to you for doing some due diligence and doing some back of the napkin calculations proving a study incorrect in its assertion.

Well, while ~$9/hr is a lot better than ~$4, it's still well in the category of squeezing drivers, IMO.

In fact, if your goal is to squeeze your drivers, you actually don't want to squeeze too hard because soon you'll have no one left to squeeze. $9/hr is perhaps a level a number of people can (barely) subsist at (at least for a while) while $4/hr may be untenable for almost everyone.

(I agree, though, that drivers aren't like captive servants, as some seem to assume.)

FWIW I actually agree with you re: squeezing, just something about the numbers either way didn't seem to add up (others were quoting $13/hr, study was saying $3/hr).

Even with this revision the hourly wage is well below the $15.00 minimum wage here in Seattle. I wonder if after expenses Instacart and Amazon delivery drivers make any more than the typical Uber driver? I think contractors across all income levels need better protections. Laws should be enacted to guarantee after vehicle expenses that if one drives an Uber for an hour one makes at least a minimum wage.

If there are $15/hr jobs, why do you believe so many people are willing to accept half that to drive for Uber? I wonder what their total pay is after tips.

Since nobody seems to have any idea how much these things actually pay after costs (see: this correction and the original study), it's plausible that people would expect this to pay more than it does.

Also, it's really difficult to define the one, right way of correcting for vehicle expenses. Some people would even work for free if it just gave them access to a high status car (live off savings while pretending to have "made it", as proven by the car). Others would be fine with any old beater, or a bike.

I would like to think that while it might be difficult to calculate my exact hourly income, I could tell the difference between $8/hr and $15/hr.

You think these people making $15/hr don't watch their actual take-home after expenses carefully?

The difficult thing to calculate in the short term is wear and tear on the vehicle. Average Joe is potentially only counting fuel and not total costs per mile.

Do you talk to Uber drivers?

No, but I worked at a pizza place for several years. Everyone was vaguely aware of the fact that they were using up car value delivering pizzas, but only a couple of older full time "career" drivers seemed to actually calculate it out so they knew what they were getting.

I think word would get around after a while.

I think it just did.

I wonder how much reach that study has among Uber drivers and potential Uber drivers.

The study might matter to us and regulators, but the thing that matters to drivers is how much they as an individual make. They had that information already, and knowing the average income doesn't help them figure out how much money they're making.

That can be confusing for drivers for some months as they may not realize the increased maintenance cost for a little while. But eventually they'll figure it out.

The evidence I can observe is consistent with the hypothesis that Uber and Lyft are paying sufficiently to motivate drivers.

Greater flexibility in hours and reduced scrutiny of immigration status are two reasons I can think of someone may knowingly prefer a lower than minimum wage job driving for Uber than making minimum wage at, say, a fast food restaurant.

This is one I hadn't considered being such a big deal. Some people/cultures have a hard time coping with strict start and stop times of traditional jobs. You can literally work any random time as an Uber driver.

Uber doesn't tell you "you'll make 15$/h".

They tell you "this drive will make you / made you 27.98$"

It makes it a lot harder or less likely for the users to compare to an actual wage, especially since the uber jobs are basically provided on a as-needed basis.

What are you even questioning? Do you think everyone knows how little it pays BEFORE the report came out?

Maybe you didn't know how much the average Uber driver makes, but any individual Uber driver would know about how much they themselves are making.

Uber costs are different in different areas. I suspect the areas with higher minimum wage also tend to correlates with higher rates for Uber due to a higher median income, enabling a higher optimal price on the price:demand curve. A random website and some very nonscientific sampling (internet forum stats at their finest!) seems to provide some confirmation of this hypothesis:

http://uberestimate.com/prices/Seattle/ - $1.35 base, $0.24/minute, $1.35/mile, $1.95 service fee, $5.45 minimum fare

http://uberestimate.com/prices/Miami/ - $0.95 base, $0.13/minute, $0.91/mile, $2.20 service fee, $5.50 minimum fare

Do you believe that Uber and Lyft would exist if they had to pay what the government has determined to be an eqyivalent minimum wage? Hell, we can't even agree on how much these drivers are actually earning, according to articles like OP, why do people feel that having the government step in and set some arbitrary legal price target is superior to relying on individuals to decide for themselves whether the work is worthwhile?

Do you feel that all of these drivers are unknowingly losing money and that they would be better off without the extra income that they willingly generate?

I'm not sure if this is your intention or not, but your comment reads as if to indicate that you believe so strongly that markets are efficient that you are unwilling to consider data that suggests an inefficiency exists.

Whether or not an inefficiency exists, setting a price floor is guaranteed to create one.

We understand that artificial price controls are generally bad for economic goods, why do we treat labor differently? The fact that human suffering is involved does not magically override market forces.

Because maybe we shouldn't treat human beings solely as economic goods? Sure, the market exists, but it's not like some giant metaphysical thing with laws that bind us the way that the laws of physics bind us. It's okay to do the thing that's more "inefficient" if it better promotes human welfare

>if it better promotes human welfare

But this assumption does not match our understanding of the effects of market manipulation. Well meaning minimum wage laws, just like price floors, can create ineficiencies that are net detrimental to to society.

Imagine an extreme scenario where implementing a minimum wage gives a raise to 50% of the population, while 50% are laid off. I feel like this side is too often neglected in the minimum wage debate.

I would argue that it is better to have 50% of the population on unemployment payments rather than having them employed under below-human-dignity wages. The later looks better on the statistics because those people are working.

The extreme scenario you propose is in my eyes an acceptable result of a minimum wage system, because implementing a minimum wage says "nobody should work and earn less than X$/h". For people unable to find work under these conditions we have social safety nets (well, the US doesn't but other countries do)

First of all, the minimum wage is popular with the crow. So it's a good tool to win votes. Second, a high minimum wage drives out low skilled workers. So high skilled workers have less competition. Third, companies who already pay more than the minimum wage generally favor raising it to their level because it would drive out competitors that cannot afford to pay that much.

It doesn't matter if they could exist. The point is that the minimum wage is there so the _employees_ can exist and make a living.

If a company's business model relies on paying people shit wages, the blame lies totally on the company to fix it.

But this is an excellent example of a case where forcing minimum wage equivalent on ride sharing would result in a net loss of jobs, is it not? Where is the money going to come from? I use ride sharing because it is cheap and convenient, but it is something I can gladly go back to living without.

Meanwhile, on the "market" supply side, you have individual people rationally choosing to drive, and you are advocating to essentially take that agency away from them, by artificially setting a price floor.

But as we all have seen, the ride sharing market as it stands right now is artificial.

Even though people are getting paid a pittance, the actual fares are severely subsidized by VC money, so what you're paying for isn't sustainable.

The other shoe will drop soon. And drivers STILL won't get paid much. So it's not like this business model is that strong as it is.

And if the shoe drops, drivers quit, or the whole system goes belly up for lack of profitability, and the market has solved the problem, without any artificial meddling which otherwise guarantees a less than optimal result.

I don't understand the problem. Especially in this business model. This isn't some sweatshop where people are required to grind all day and have no way out. These are people who generally earn extra cash in their spare time with a vehicle they would have anyway. I just don't see why they need any kind of special protection from a nanny state.

If you feel that ride sharing is not profitable, don't start driving. Let everyone else drive if they want, for whatever rate they deem is sufficient compensation.

For most of us that read this site, we are lucky that the minimum wage debate is largely an intellectual exercise. We can throw economic and free market theory into the debate until the cows come home. But to me, this is a bigger issue of what is the base standard of living we want for members of our society. I don't think it's crazy to ask businesses to pay their employees a fair wage in this age of historic profits. And as we've seen time and again, raising the minimum wage to something like $15 has had no negative economic impact (like in Seattle).

And even with the very low rates that Uber pays its drivers, they're still rushing to build an automated fleet. So this argument that a minimum wage will make these jobs go away, just doesn't hold water, because those motivations are _already_ there, and the trend is _already_ going in that direction.

You're also right that Uber isn't a sweatshop, nor is anyone being forced to drive for them. But to throw your hands up and just say "oh well, it's just how it happened, that's just how the market is", as if this wasn't a carefully planned way for Uber to skirt employment and labor laws, and ignore all the malice and greed involved, simply doesn't faithfully represent the actual situation.

By the way, I say all this knowing that my consumer behavior is hypocritical: I use Lyft every now and then, and I still shop at Amazon.

I wonder if the hourly would increase for larger cities because of more individuals hailing. Though certainly increased expense from fixing the car because of city driving.

I wish Uber would release the numbers for review but that won't happen.

This value seems to make a bit more "common sense" style sense - but it's still way too low for a "non-tip" job. Hell, it's probably even too low for a job with tips (which bugs me, but separate topic).

Given that Uber is most popular in the bigger cities where the cost of living is correspondingly higher, is it enough?

> it's still way too low for a "non-tip" job. Hell, it's probably even too low for a job with tips

Tangential to your main point, but Uber does have tipping

Enough to convince people to drive as opposed to working some other job or leisure time? Evidently.

This is still median profit from a sample group where > 80% worked less than 40 hours per week.

The median is someone working well under 40 hours per week.

I wish they would release the overall income distribution based for their model instead of just one number.

So they still don't make minimum wage and some lose money.

Definitely too low for a primary job. However, it might make sense for people to do as an extra 5-10 hours a week, or during peak festival times when the taxi system is overloaded. If a person needs to turn their extra time into money, but don't have enough extra time to get a second job, it could make sense. I'm not sure either Uber or Lyft could survive on those kind of drivers, though.

There may be some ways to make it work more consistently--though not in a way that Uber/Lyft wants. I've met drivers who mostly work 3am to 7am shifts, to catch back-to-back airport runs. The enterprising ones also actively work to get Uber/Lyft out of the process by offering their number directly.

“The enterprising ones also actively work to get Uber/Lyft out of the process by offering their number directly.”

I do airport runs. A few have given me their card. At first I thought this was cool as they charged $25 instead of $30. But then the driver was unavailable a few times. Managing different cards with a hierarchy of backups is a pain for users.

I switched back to Uber. Interestingly the last one I used charged $35 which was more than Uber. I was already in the car so I paid.

People underestimate the service Uber makes in managing riders and drivers. I don’t want to “have a guy” who’s not dependable. Perhaps one day, I can afford a full time valet and driver. That day is not near.

I don't see this working for Uber/Lyft drivers. For "gigs" like tutoring, it's easy to get a student or parent to split the referral service's fee, because they do more or less nothing after the first session, and a personal relationship is valuable. For car services, you just want to get from A to B at some random time, and Joe Driver may not be near A at that time.

If you contact that driver directly, and they don’t have a commercial auto policy, there is no insurance for that ride because all consumer auto policies have exclusions for commercial activity.

I switched from a weekly car service to using Uber. It's more pleasant, because it's more flexible. And cheaper.

Previous threads (on the original story): https://news.ycombinator.com/item?id=16498551, https://news.ycombinator.com/item?id=16501017

Underwhelming correction from the author/economist.

Sad that the correction has fewer upvotes than both of the HN threads with the original dubious statistic:

https://news.ycombinator.com/item?id=16498551

https://news.ycombinator.com/item?id=16501017

I think this speaks volumes about HN's user base being far less enlightened and fact-oriented than we like to think. Instead it seems that the articles reinforcing our biases are the ones we pay the most attention to.

According to the new study the driver make between 8-10 bucks an hour. I guess its better than 3 dollars, but that still isn't a livable wage in America.

Would you prefer earning $10 with uber where you set your hours and have freedom or earning $10 at Walmart when you still have to work when your kid is sick

No.

Uh huh. Does this include commercial insurance for "driving people for money"? Because your personal insurance likely has a clause saying it does not cover commercial activity.

What this means: if you get into an accident while engaging commercial activity, you aren't insured. And your license is then revoked due to lack of insurance.

Fun times.

Uber provides insurance for drivers while they are driving for Uber: https://www.uber.com/drive/insurance/

Either way is more than a grad student makes grading papers and carrying out research plans

Raising two billion dollars without having a product in the market is a huge red flag.

Most major break throughs started from a very specific problem, that was addressed, got some market traction, and then refined over time.

Large up front investment without testing the market has been done before, but I can't really think of a single recent example where it went well.

Maybe perhaps SpaceX, but I'm not really familiar with their founding story and costs associated. But also consider that one is literally launching rockets into space, the other is creating a VR/AR headset.

Launching a single rocket costs millions! Buying this or any AR/VR headset will ultimately cost $1,000. Hence I don't see why you need $2B to get this off the ground.

And if they are having a problem shrinking the tech, well then it's not a real product. Because they aren't pitching here is a refrigerator sized computer and a headset, they are pitching here is a headset, so if you haven't shrunk it, then you really haven't built the MVP you were looking far as portability and comfort I'm sure are part of the essential requirements for this product.

Commenting on wrong post maybe?

Think so.

Reply on news.ycombinator.com